Rise in rental prices expected with the reopening of borders

BuyersBuyers co-founder Pete Wargent revealed that “a huge backlog of arrivals waiting to enter Australia after two years of border closures” combined with “investors seeking both capital growth and rental yields” could lead to a sharp drop in vacancies.

These are not the only factors that could contributing to a potential supply-side rent shortage, according to Wargent, who also noted, “We no longer have high volumes of investors from mainland China to drive the construction of new high-rise units, which has slowed down the supply of new apartments. »

Where vacancies have been seen, Mr Wargent said “we can expect the recovery in rental demand to be very strong in Sydney and Melbourne”.

In some regions, this backtracking has already happened. Citing research from SQM, Mr Wargent reported a very sharp drop to a 16-year low in the rental vacancy rate, driven by sudden big drops in Sydney and Melbourne in January – and prompted by the return of people in workplaces in capitals.

Banking on an influx of people returning to work locally and the arrival of migrants and international students, Mr Wargent predicted that rental markets will continue to “experience very difficult conditions”, which means we can expect at to see “rental price growth rise in the 10-20% range immediately”.

Weighing in on current market conditions, BuyersBuyers Managing Director Doron Peleg highlighted opportunities for investors by looking at specific regions to benefit from capital growth and rising rents, which could lead to good total returns. .

Mr Peleg said this approach is essential, particularly now that “the housing-to-housing price ratio is at an all-time high, reflecting the fact that home affordability is becoming a challenge for many investors”.

Drawing on Mr. Peleg’s insight, Mr. Wargent identified locations with “strong opportunities” such as “east coast coastal markets, including the SunshineSun, NSW Sun, VIC Coast, as well as Sydney’s northern beaches and eastern suburbs” and also “Melbourne’s inner southern suburbs”.

For specific market types, Mr. Wargent pointed to “boutique unit developments with reasonable strata levies, and if budget allows, look for family units with owner occupier appeal, in popular suburbs where supply is somewhat capped.

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Rent refers to the payment made periodically by a tenant to a landlord for the use and occupancy of a property.

Rise in rental prices expected with the reopening of borders



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Last update: February 18, 2022

Posted: February 19, 2022